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Outlook for FTSE100: September 6, 2019
The FTSE100’s long-term uptrend between 2011 and 2018 is evident (higher highs and higher lows). This uptrend is likely to have stalled in 2019 due to the presence of progressively lower highs.
FTSE100 Monthly Chart
July 2019’s pinbar candle, located just below the descending trendline on the monthly chart, set the tone for August’s bearish move to the horizontal support at 7066.5. The trendlines connecting the 2019 highs and lows form a symmetrical triangle. The oscillator is trending downwards and this may indicate oncoming bearishness.
Following the August selloff, price rebounded to the 7360.5 resistance (6-13 May high) and was rejected. This move is reflected in the pinbar located below 7265.0.
FTSE100 Weekly Chart
A Fibonacci retracement trace from the swing high of July 30 to the swing low of Aug 25 shows that the 38.2% Fibonacci support level is being challenged by the Sept 5 bearish candle. This price level has held up against bearish challenge in the previous two trading days.
FTSE100 Daily Chart
Brexit headlines and the US-China trade war, with its attendant impact on global growth, continue to be the driving fundamentals for the FTSE100.
Bears will need a successful break of the 7265.0 level (38.2% Fibonacci retracement) to the downside so as to bring 7166.8 into focus (23.6% Fibo level and Mar 25 low). Below that, 7066.5 could also come into play. A 3% penetration or a double candle close is required to confirm the downside break.
Conversely, bulls may benefit from a failed break of 7265.0, as this could open the door for a possible retest of the 50% Fibo level at 7358.6 (March 21 and May 21 highs). A break above this level brings 7444.2 into focus (61.8% Fibonacci level).
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